Property Sales Reach Record High

Profit for the First Six Months Surges by 210%

Acquires 5 Land Parcels to Strengthen Land Reserve

Introduces Investor to Capture Road Opportunities Along Belt and Road

 

HONG KONG, CHINA, - 17 August 2018 - Road King Infrastructure Limited ("Road King" or the "Company", together with its subsidiaries the "Group", 1098.HK), announced today its interim results for the six months ended 30 June 2018 (the "Review Period").

 

During the Review Period, the Group recorded property sales of RMB17,225 million, and the toll revenue from expressway toll road was RMB1,470 million, amounting to RMB18,695 million in total. The profit for the period surged considerably by 210% to HK$1,160 million (2017: HK$375 million). Earnings per share was HK$1.08. The Board has proposed an interim dividend of HK$0.30 per share (2017: HK$0.15).

 

Property Business

In the first half of 2018, the property market environment became more complicated. The Mainland Chinese government continued to implement last year's specific austerity measures based on regional circumstances, and control measures, such as regulating land auction, tightening home purchase restrictions, restriction on prices and mortgage, have gradually become normal control measures in various regions. 

 

The Group achieved remarkable results in property segment through the dedicated efforts of the management team, the property sales (including joint venture projects) recorded RMB 17,225 million. 

 

During the Review Period, property delivery of the Group (including joint venture projects) amounted to RMB6.2 billion. The average price was approximately RMB16,100 per sqm, which increased significantly as compared with the corresponding period of last year. 

 

Together with the delivery of more high margin projects during the period, the Group's gross profit margin increased significantly to approximately 47% in current period. Profit of the property segment also increased to HK$915 million, representing an increase of about 5 times comparing to the corresponding period of last year.

 

For land reserve replenishment, the Group's property and investment and asset management segments acquired 5 parcels of land in Mainland China, mainly for residential purpose, through co-development with competent enterprises in the first half of 2018, with an aggregate floor area of 542,000 sqm. As at 30 June 2018, the Group's land reserves was 8,480,000 sqm in total and total area of properties pre-sold but yet to be delivered was 1,770,000 sqm.

 

Toll Road Business

In the first half of 2018, the Group received cash distribution of HK$374 million from the toll road joint ventures, including the repayment of shareholder loans. The average daily traffic volume and toll revenue of the Group's expressway toll road portfolio reached 254,100 vehicles and RMB1,470 million, respectively, representing an increase of 16% for both as compared with the corresponding period of last year. 

 

During the Review Period, all expressway projects recorded increases in toll revenue and certain projects even demonstrated a double-digit growth in toll revenue. Thus, the Group's share of profit of infrastructure joint ventures for the first half of the year increased significantly by 24% to HK$339 million as compared with the corresponding period of last year.

 

In early August 2018, the Group and CVC Capital Partners ("CVC"), a fund of CVC Capital Partners, entered into an agreement. Pursuant to which, CVC will contribute capital of approximately HK$2,000 million to the toll road business of the Group. After the completion of the transaction, the Group and CVC will own 75% and 25% interests in the toll road business of the Group, respectively.

 

Going Forward

Looking ahead to the second half of the year, Road King concluded, "As a pillar industry, the real estate industry in Mainland China undoubtedly supports economic growth, especially when there is trade conflicts between China and the U.S. Therefore, the Group stays cautiously optimistic in regard to the long-term prospects of the property development business. The management and operations team will continue to adopt a practical approach and follow the business strategy to strike a balance between profitability and sales volume. 

 

To establish the Group as a more widely recognised property developer, it will continue to research and develop market oriented products to boost the sales. The Group will optimise the land reserve portfolio in Mainland China and Hong Kong in a cautious manner and seek for more development opportunities with business partners. 

 

As for the expressway projects, it is expected that the expressway business will maintain a steady development in the short-term with expansion opportunities in the medium and long-term." (mor/roc).